tv Bloomberg Markets Asia Bloomberg March 21, 2017 11:00pm-12:01am EDT
have put billions of dollars back into the system. and the promise to shareholders will come under scrutiny as flagship companies report. myid: i was looking at terminal. when you look at japan, you have talked about $200 billion wiped out. following wall street, lower. the explanation of why it happened it is because of concerns over the growth all of these from the trump administration not passing through congress. be i am hearing this may not the case. take a look at the bloomberg right now. i will walk you are this chart. reflation has not been priced in for a while. take a look at these multinational companies,
outperforming domestic market oriented company since january. thatit comes to stocks could gain the most from buybacks, that would be the result of repatriation of funds. when youthing applies go to companies that would benefit from high taxes or could get hit from high tax bills, compared to those against the lower tax companies. and that ratio of companies, you goingeing they have been down. since january, we have seen this not being priced in. what actually led to this selloff on wall street? there is one explanation. they are saying the following friday's option, we could be seeing and in balance. means is markets are
free to move again. on trump or the white house or his potential policy changes because this may have been priced out of the markets already back in january. we will have more on the markets and the breakdown of everything happening here in asia as well. for now, let's get to first word news with heidi. -- haidi. the market has fallen, the biggest drop in more than three years. they have been injecting hundreds of millions of currency into the financial system. institutionshe that missed payments include role commercial banks. china helped drive japan's exports to a two year high.
imports increased 1.2%. that left the country with a trade surplus of $7.3 billion. exports to china, japan's largest trading partner, jumped from a chipman's to the u.s. were half of 0.5%. the trump administration places a lot of emphasis on trade deficit speed from the perspective of washington. a bitpan, it is challenging because that deficit with the u.s. continues to be large. problematic. the japanese have to decide, the do they want to push on tpp? if they do, will that antagonize washington? it is impossible for them to flip a $60 billion deficit vis-à-vis washington overnight. think, is tocom, i continue to lead on tpp. haidi: more rate hikes are
expected this year. she calledn the -- on the central bank -- she also favors shrinking the balance sheet this year. reports from geneva saying north korea aims to accelerate its nuclear program to develop a first strike capability. russia sent in investors to the is noto said pyongyang afraid of new sanctions. reports say korea may have testfired more missiles. global news, 24 hours a day. i'm haidi lun. this is bloomberg. david: let's get a check of the markets. it is basically as sea of red. sea of red.
the only green in the bond markets spirit australia, 1.6%. see how black that is? you are looking at the worst day for aussie equities, going back to the u.s. elections, november 9. we're looking at thailand, down 0.6%. hump a day is turning out to be hump day. mark, where do we start? what are you watching? mark: it is a sea of red. if only a risk-averse stake. the main point to note, this is really a u.s. led selloff. of course it is going to rip around the globe. the overall outlook remains very positive. it doesn't mean we can't have a correction of several percent. in u.s. equities, very little volatility for time.
a correction of 5% would be quite healthy for the long-term bull market. for the rest of the globe, the outlook looks positive. shery: when we are talking about asia, the pboc is playing this delicate balancing act. injecting more funds and liquidity, but at the same time, money market rates at the highest rate in two years. to a a miscalculation lead very scary correction? mark: definitely china remains a concern. i am in the camp where i do not think it is going to be a major problem in the next couple of years. i think china is focused on growth and growth rates are still high enough, the debt problem will not come to a head. they are trying to squeeze some of the smaller, riskier lending rigged there is a risk they go
too far. at the moment, i think that is probably going to pass over and not be a major story. something to watch on the radar. say, thisfice it to whole narrative of money getting back into the japanese currency, do we fall to 119 or 118? mark: the yen is going to be popular at the moment. risk aversionc trade. it has more strengthening ahead. whether it will strengthen against the euro is hard to know. the euro has some positive elements of its own. the netherlands elections past ok. the risk premium is dropping her that is good for the euro. possibly a more hawkish tone from the ecb. may not be the easiest
way for strength, but i expect the short term. british pound, rising u.k. inflation, is that going to provide some support? reactthe market seems to that way thing the moment. we saw sterling pop higher. it is a bit of a word one -- weird one. the market is trading at the moment, other boe members will have to follow forbes and become more hawkish. that will ultimately support sterling. people got so negative. positioning is so short, it is hard for it to sell off. any capitalist is more likely to surprise in the positive side. david: thank you for joining us. and of course, you can follow more on this story and all the days trading.
commentary and analysis from our editors as well as cool charts to give you a bit of a visual aid as you look through. shery: we are big fans. results centsof completing the reorganization of the business empire. conglomerates reporter joins us. this is all about the payout? >> i think dividend is definitely the focus. they want to see higher dividend payout. this has been returned. whether he today will fulfill his commitment. earnings, the u.k. the biggest market. the brexit story as well. when it translates into hong
kong dollars, the earnings of c.k. hutchison will be lower. this currency drag will offset see moreis -- we will growth in his earnings. david mentioned european sales being a key factor of every of those are some of the comments we should focus on. >> is one of them. this isant to know -- important. -- anotherdone, thing, people want to know about property markets. higher it earlier, the
property price at the moment is a kind of risk for reasonable return. we have seen this rebound in hong kong property prices. thank you so much for joining us with a preview of what to expect out of earnings from li ka-shing's two biggest companies. david: you can also turn to your bloomberg for this. get commentary and analysis from our expert editors on the story. if i'm not mistaken, this should be out post market. we see reporters in the lobby of our building. that tells me -- shery: it starts getting crowded. looking ahead, the chinese premier heads to australia. a look at what is on his agenda. david: has the trump rally run out of steam? this is bloomberg. ♪
welcome back. this is "bloomberg markets asia." shery: a quick check of the latest headlines. takata is tumbling in tokyo. the company said to be ready to let automakers decide on its restructuring. they have already invested billions of dollars in repair costs. the company says it wants to avoid a court led bankruptcy which would interrupt the flow of parts. other stocks have not done really well. toshiba said to be offering stock in real estate. one of the choices of toshiba failing to pay back a debt? evelopment could be
serious. it isre is a default -- investors rather than lenders who are likely to get their money first. 5% to $8.4nue rose billion last quarter. $30 million less than analysts expected. nike is losing market share, especially in the u.s. shares have fallen 10% in the last year on the benchmark -- although the benchmark s&p 500 has risen. our next guest likes natural resources which serve as an inflation hedge. we are joined by our guest. of northern trust asset
management. there is a record amount of fund managers who see u.s. equities as being overvalued. does that make you rethink your positioning right now? >> it doesn't make us rethink but it makes us worried, again, we have got a consensus trade. necessarilyas not appeared overnight. we have had that for several quarters. we do like the positioning of u.s. equities from a growth, earnings perspective. one of the things we are looking at always is hard economic facts that help contribute to harder economic growth. again, for us, that has been one of the determinants that supported the u.s. large cap overweight. david: we have a chart here. 6999. what supports the next leg?
at some point we have to rethink, we might get a fall. it almost comes down to market of quality? thingse are a number of that factor into this. it is important to understand why we have had the continued leg post the u.s. election in terms of the promise of lower corporation tax, that is significant. that flows directly through to the bottom line. it is cash position. then you are looking at global dynamic trade activity as well. we have seen a growth pick up across the world, both in terms of sentiment surveys and hard economic data. just u.s.rts not equities, global equities in terms of the general uplift and upgrade. not just sentiment in actual economic data. , if you look at
the relative valuation of different securities, the u.s. relative toervalued other parts of the world. that is the next question investors have to work through. value difference worth it? : when it comes to the reflation trade, we were just talking about how those have been priced out. multinationals are doing better. by back stocks are not seeing that outperformance we saw. now on thenges trump,s and president when it comes to earning growth in the u.s.? a risk case we have cold out.
policy inertia. it is important for us, when we are talking to our investors, ensure investors are way we have -- a where we have had lots of promises. if they don't occur in the time and manner the market and populations are expecting, the consequence is disappointment in terms of popular feeling and market reactions. which is not just trump related. brexit, the italian referendum. it is the policy inertia piece that is a worry for us from a risk point of view. up thei want to bring bloomberg. we have this chart that shows there could be further downside. what could be a healthy technical correction. is this the bottom or could we go further before we see a rebound? >> from a technical perspective,
i would support that 5% would be a healthy correction. we all experienced managers, investors, we have a flat line rise. that is a worry. invariably, those moves are never sustainable. i think investors are looking at versusative overvaluing the rest of the world. we are seeing and noticing repositioning in terms of u.s. equities as well as emerging markets. neutral tothe overweight positions at the expense of the u.s.. there has already been profit taking to help fulfill some of those positions outside of the u.s..
i think this would accelerate some of those moves as well. what does your trader self tell you? do i just go along? may -- to the beach and in may? timing is the important. not ignoring some of the political risks. and significant. if you overlay that, not with expectations but actual market, not being benign but taking a different view. being positive. not just fundamentals but also growth. sentiment. business as well as consumer. it has confounded the expectations and the run up to those political events both in terms of the results and the tension we have seen.
although it is a risk we will continue to call out, we have a number of different european elections in play. for the u.s.bility political system to go through significant changes both in terms of tax policy or organizational function. we have no idea how that is going to affect the market. it does seem as though the last three big events have not touched the market significantly. perspective,orizon it is better to have a longer time horizon versus a shorter time horizon be prepared to take the call mean breath and reassess. shery: we want to take a conversation with a longer term perspective. we do have the discussion. of northern trust asset management. david: we are going to be
shery: let's take a quick check of commodities. gold, seeing gains. falling 0.1%.is copper futures also following -- calling for the fourth consecutive session. earlier, were talking thinking the prices of iron ore likely to remain jumpy. >> i think this price is sustainable. the reality is we will see this level of volatility, between 70-100. i see that is the future for the next few months. >> it is all supply and demand. where are we with that? >> the most exciting supply
picture is ourselves. our flagship operation doing very well. we announced we are at 75% capacity. that gives us somewhere between 2.2-2.4 million tons. we announced that the bridge is china -- between china and russia is coming in. when prices are going so good, people want to get back in. are you thinking that to happen, when it comes to these local miners in china? >> it is one of the reasons i talked about volatility. people talking about the possibility of bringing back production. es, we are min itively considering bringing back online. it cannot be brought back online instantly.
xfinity. the future of awesome. it is 11:29 in hong kong. gorsuchreme court neil says he would not hesitate to rule against president trump if the longer require it. he also refused to say if we would uphold the ban on travel from six muslim nations. gorsuch said he made no promises on how he would rule on any particular issue. the process, from the time i was contacted, with an expression of interest for a potential interview to the
timeout with nominated, no one in that process ask me for any commitments, promises about how i would rule in any kind of case. haidi: britain has joined the u.s. in banning large electronic devices from the cabins from flights from certain middle eastern and african countries after the suggestion terrorists were planning innovative attacks. canada also reviewing a ban. maker says aluminum it may delay results as it grapples with results raised by an auditor. the auditor has suspended work through december. it was targeted by a short seller last month. turn spurred a selloff. shares down 12% over the last month. the stock suspended in hong
kong. looking to raise $2 billion in its review bond sale. it is part of a plan to cut the markets to $10 billion. saudi aramco is expected to launch an ipo next year which could be the biggest share sale in history. news powered by 2600 journalists and analysts. this is bloomberg. david: overall benchmark, down 1.5%. markets in mumbai and india, futures down 60 points. quite a reversal, given that india has been one of the favorites. let's see if there are any favorites in this sea of red in the markets right now. is a down day but i'm taking
the glass half full aspect. korea at a near six-month high. certainly not a pretty picture. regional00 leading me index, lower. commodity prices means sold off the rate at 5% drop in iron ore, weighing on the mining stocks. back to that screen, weakness coming through in japan's nikkei. down by about 2%. we are seeing markets across the region being sold off. tracking atg index, solid moves, down 1.3%. gold, dollar, oil well, currency markets looking week in asia. the weakness in japan coming despite the fact that we
actually have some fairly good movement coming through in japanese exports. stepping a 14 month losing streak. every -- inro february. a look at some of the stocks we are actually watching. chinese banks, coming under pressure. climbs to benchmarks their highest level since april, 2015. the pboc had to inject hundreds yuanillions of your on -- in the financial system. i mentioned the big slump in iron ore. we will have a look at how that is impacting things. not a great day for investors that we have had that good run-up coming through over the last couple of months. some saying this is just a little bit of a correction. healthy correction, kind
of like a detox after a big weekend. pboc,n the story of the injecting renminbi back into the system. tom mackenzie in beijing, let's talk about this. tom: the mist interbank payments happen monday. the pboc stepped in on tuesday and they have again today. that rate has edged down, 2.45%. more support from the pboc. we have a terminal chart that shows what is going on. see from august, 2016, the central banking has been nudging these rates slightly
higher. two steps forward, one step back. we saw a again, the first two weeks of march, two straight days when the central bank drained funds from the market. the overall picture is these slightly increased rights -- treats are going to increase. overall, it is about messaging. we have seen the impact in the bond market. we are seeing pressure on chinese lenders. those money rates continuing to rise since august of last year. not all to do with bringing back financial stability. how successful has it been so far? tom: that is the key question, that bloomberg put to the chief economist. these are more sophisticated. they are more targeted. we have to get to see whether they are proving affected read what we are seeing, the
in the financial system. this is what we are going to be focusing on is how much pressure these banks, over. gotoff the record 12.45% we in 2013. wereis when regulators trying to shake out some problems they saw in the banks. a long way from that. the consensus, rate are going to continue to rise as the pboc puts pressure on the banks. one manager saying expect volatility and liquidity shocks. the chinese premier on his way to australia for his first visit. shery: joining us from sydney. china, so important for the australian trade. the important to be high on
agenda. what can we expect on the trade front? paul: there has been plenty of warm words ahead of this visit. the foreign ministry saying they messagesend a positive to the world these nations are bundled with free trade. nationalto one of the newspapers, saying china had and hadolationism suffering visited on the people. he said opening up china has led to benefits for all nations involved. a bit of a slight dig at u.s. protectionism. the trade minister speaking on bloomberg earlier today. he was speaking warmly about the relationship as well, saying it is in good shape. david: it speaks to the fact, we are going to see some mutual backslapping. diplomaticormal
practice. beneath the surface, it has not been all smooth, has it? paul: it has not. the leaders are putting on the best possible face, ahead of this visit. in the background, there have been a few setbacks for the relationship. the attempt by some chinese investors to purchase properties, a series of large cattle stations in australia. was keen on a couple of utilities which he struggled to get permission to buy for national security reasons, the reason given. this was also the first visit of the senior leadership cents since 2013. -- there are wrinkle that will have to be smooth out.
exportsars ago, beef were suspended to china. factories and austria licensed to send reef to china. 20 of wrinkles to iron out. at least when it comes to the australian trade minister, he seems to be pretty positive. he said the country's relationship with visits -- its largest trading partner is strong. relationship with china is very strong. there is an op ed sent to the australian newspaper by the premier. we have seen strong growth in investment and two-way trade. australian export volumes are up significantly. the relationship has never been
as strong. discussions, there will be opportunities to build on the mutual cooperation between both countries. we have a strong focus making we remove nontariff barriers between our two countries. making it easier for businesses to expand in terms of investments ties and trade ties. ceo,: we also spoke to the talking about the progress of barriers. there is a lot we can do in nontariff terriers. that is significant, tariffs, we are still a long way from having an ideal situation when it comes to nontariff barriers. we are hoping this visit will see some traction there. agreement, chapter
there was a panel set up to assist those nontariff barriers. certainly positive news coming , which has been highlighted in the media. we hope to see more progress on that front. i think that is positive. on the investment front, i still think there is a little bit of concern here in china. australiadesire for to receive chinese investment. chinese capital. i think we can push a more positive message from the australian and. -- end. shery: other big guests ahead. joining us from our london bureau rhythms that is that 2:30 p.m. in hong kong. david: will speak to the goldman sachs management international ceo. 5:00 p.m. hong kong, 8:00 p.m. in sydney.
david: welcome back. i'm david ingles. are theoining us international cio and ceo of northern trust asset manage ment. they are good hedges for inflation. isn't it a little too early to think about inflation right now? >> there is an argument for that. part of the overweight was the upgrade in global growth. the commodity price moves we have seen have been as much a reaction on continued supply
versus a reduction in demand. you see the supply side dynamics, increasingly pumping out enough and maintaining supply. demand has been reasonably robust and we expect demand to improve. are we talking mining stocks? >> it is broad-based. there is not one particular area where we would say, this is going very strong day and this one is going less so. if you look at global economic trade, both from the service sector as well as manufacturing, we are seeing a general improvement across the world. you have, sector for sector, price for price, from a commodity perspective. if you take the overall low will gdb picture --
one part of the worry is you do get some of these nuanced supply oral shocks to demand. tariffs, a big one. you could see some significant price swings on raw material needs for certain countries being reduced based on tariffs. there looking forward to u.s., europe, the u.k.. that is an important dynamic to understand. shery: what do you make of leak a chung -- the visit to australia? we had the strong relationship between australia and china. done a veryhina has good job trying to ensure they open up and maintain those trading relationships while supporting them as well. from my perspective, china has still considerable long-term growth potential. reation of the middle
class. there has been more of a build first and so later approach to china, which is appropriate. coulter lay, you can understand that. it makes sense. -- culturally coming can understand that. think is in a prime seat here in terms of repositioning itself. worked a lotsly with the u.k. recently. again, potentially looking at post-brexit trade negotiation deals. not necessarily bypassing european trade but supporting and supplementing that. what australia has been doing, it has been very confident and selective in terms of who does business with. david: when we saw a lot of volatility, we have had such low volatility for a long time. will we go back into a time where we could expect more volatility question mark >> --
more volatility? significantad more events that have had the potential to disrupt markets. brexit as well as the u.s. election. and investors, the economy has looked through those events. when we got to the italian referendum, it took three hours from the result to the market reaction. the most recent time of history we can look back to, over light with hard economic data and market reactions, has been one through, subdued, continuing positive momentum. we are always worried about missing the potential risk. when we look at risk profile, what could cause a significant market reaction. let -- theent looks president looks like he is going to struggle to get his agenda through congress. we will see this on thursday
when may vote on health care legislation. see at does not make it, shock. that's it's everything back and 2018 before we get anything done. no deregulation, no tax reform. it could be significant. we were using was where we felt the u.s. market was perfectly priced. perfectly priced for every policy initiative that had been discussed, debated, and proposed. position side of that is one, if you don't get those actual policies being integrated, you should expect a consequence as well. again, i think the market has been perfectly priced and it is paying back some of that perfect pricing in terms of policy inertia. how about china, when it comes to policies? they are carrying out this
delicate balancing act. we have seen them now, the pboc having to eject liquidity into the markets because of the smaller lenders not being able to pay back debt. is this a cause for concern going forward, or will be pboc be able to manage this risk? is positive we are here in about the faults and missed payments. as investor, you are looking around the world, a high level of transparency, interbank payment systems come the shadow banking system is vitally important to a country's functioning. you need banks to be able to lend. -- they that there have have been transparent is a good thing. of that indicate more going forward. he went failure and consolidation, more transparency. do they have enough reserve is for the system? obviously they do. they are not going to allow a
massive failure. are they going to ensure they get weaker lenders of the market? have a more responsible approach to borrowing and lending? that is one of their prime responsibilities. wouldthere one market you not touch and what is your target for the s&p 500? >> the first, a market we would not touch. one of the areas we do get concerned about, emerging markets more broadly. allocations we are seeing, allocated on a broader basis, there are certain areas that offer you more longevity, more potential performance. veer and probably have more of a positive skew for asia over latin america as a guide. from an s&p perspective, i am loath to put a target on that.
and then to be shown in three months how badly it performed rate continued positivity with the expectation of a drawback. >> i think we can do 5000 by the end. shery: take you for joining us. coming up -- david: we are going to be talking about apple. there is a lucrative area, barely running. i know what that is, next on bloomberg. what that is, next on bloomberg. ♪
uphills struggle. how are they doing? >> they so far have struggled to get into the market. it has been about a year since they have come to the market. they came in so big, partnering with the largest banks in china and also union pay. it is others that have dominated, more than 60% share of the market, covering 90% of users. it has been right an uphill struggle. david: why? >> local competition and also iphone sales are not doing that well. only 9.6% of smartphones sold in china were smartphones. in terms of shipping, it went down 23%. combining that, also the local competition, a culmination of factors. shery: if you have such strong domestic rivals, that will be a challenge. how does the system itself differ from others?
use the scanning codes. apple hey, they use different technology. the stores, the merchants, have to install their equipment which is more expensive. a lot of shoppers in china, even though they have this, a lot of the people working on the storefronts they have the technology. they don't realize that and don't know how to use it. it is a user have it as well . datas there is a massive breach, people probably will not epiphany toffany -- shift their services. the problems of apple, apart from the hardware, when it comes to apple pay. one company, shares telling for the third day. after the securities and futures commission requested trading
records. of all the week for the stock, this beauty after developer, surging as much as 28% monday. telling -- falling in the final hour of the session. david: triggered by heavy trading from investors coming of the mainland. bloomberg markets: middle east coming up. give us a low down. you thel give highlights. we will continue the conversation in terms of what is going on with the us and the 500 and the losses quite pronounced. where is all of this going? joining us, from the bank of singapore. talk about the fx strategy and what it means for emerging markets. he had some interesting calls on that front. the other thing, a conversation around the restriction for electronic devices. we will see where this goes from